Musk defends receiving $4.9 billion in government support for Tesla, SolarCity and SpaceX

Tesla CEO Elon Musk defended the backing his companies get from state and federal sources as legitimate business practices, blasting a newspaper report about government subsidies as “inexcusable” and inaccurate.

According to the report published by the Los Angeles Times over the
weekend, Musk’s companies – Tesla, SolarCity and SpaceX – have
received an estimated $4.9 billion in government support in total
over the years.

The electric entrepreneur didn’t deny the company gets the
incentives, however he went on CNBC’s Power Lunch show on
Monday, blasting the report as “incredibly misleading and
deceptive to the reader.”

"I thought the article was incredibly misleading and deceptive
to the reader." @elonmusk on subsidies story
in @latimes. @CNBC

“Musk and his companies’ investors enjoy most of the
financial upside of the government support, while taxpayers
shoulder the cost,” wrote the LA Times, adding that public
records show “a common theme running through his emerging
empire: a public-private financing model underpinning long-shot
start-ups.”

“The article makes it seem as though my company is getting
some huge check, which is fundamentally false,” said Musk.

The subsidies have been disclosed in the companies’ filings and
public records, but no one has tallied all the various forms of
public assistance over time, the paper said. Its estimates of
subsidies are based on state and federal records, interviews with
local and state officials, credit analysts, and watchdog groups.

According to the LA Times, Tesla Motors has received $2.391
billion in government subsidies, while SolarCity has received
$2.516 billion. Space Exploration Technologies (SpaceX), a
private company that does not publicly report financial
performance, received $20 million in local incentives and rebates
for a space launch facility in Texas.

Among the examples cited by the paper was a $750 million solar
panel factory in Buffalo, New York, which Musk’s SolarCity leased
for $1 a year. The company will also not pay property taxes for a
decade, amounting to $260 million in savings.

Tesla is getting $1.3 million from Nevada to build a battery
factory near Reno, and has received more than $517 million from
other automakers by selling environmental credits, known as
carbon offsets.

Though after ten years in business Tesla and SolarCity still
operate at a net loss, the stocks of both companies are riding
high on future potential, the LA Times reported.

“None of the incentives are necessary. They are all
helpful,” Musk countered, describing the various incentives
as catalysts that speed up the rate of innovation, offered
because voters “want a particular thing to happen, and want
it to happen faster than it would otherwise occur.”

He said the only incentives he actually asked for were for the
launch site in Texas and the Nevada battery “gigafactory.” Nevada
is actually giving Tesla a tax break of just over $50 million a
year over 20 years, Musk explained, amounting to just one percent
of the facility’s predicted $5 billion annual output.

He added that Moody’s concluded the incentive was a boost to
Nevada’s credit rating.

Speaking to CNBC over the phone, Musk said the other automakers
chose to buy Tesla’s carbon credits rather than invest in
electric car production themselves. He said Tesla’s goal has
always been to create an affordable mass-produced electric car,
but that development and economies of scale just aren’t there
yet.

“Customers purchasing cars this year are directly helping to
fund a more affordable electric car in the future,” he said,
adding that Tesla was hoping to have a mass-market model by 2017.